Security threats, civil unrest and geopolitical risk ranked at the bottom of the corporate risk outlook in 2021. Little did many companies around the world expect, but there would soon be a crisis breaking out in eastern Europe.
Only 16% of HR directors and corporate risk managers rated geopolitical risk as a contributor to expected productivity decline. Topping the ranking was Covid-19, drawing 67% of the responses to risk mitigation consultancy International SOS’ research . And, the top two challenges businesses foresaw for 2022 related to Covid-19. That lack of foresight may have resulted in an ill-preparedness for geopolitical crisis, such as that happening in Ukraine.
“Many organisations have been less focused on geopolitical risk, as the response to Covid-19 has taken precedence. ” says James Bird, security director, intelligence and assistance worldwide at International SOS. He adds that companies have been rightly focused on the health, mental health and immediate term socio-economic challenges posed by Covid-19, but that it has monopolised corporate risk preparation in lieu of other challenges, be that geopolitical crises, slower-burn security issues, or natural disasters. “As we’ve seen with the events in Ukraine, a company doesn’t need to have operations in Ukraine itself to be impacted by that. There will still be second- or third-order consequences.”
Risks such as the crisis in Ukraine can have a major impact on employees, both in terms of physical safety, and health and wellbeing – for companies in the region and farther afield as geopolitical events have an impact beyond the borders of a single country. Should anything affect employees in this way, their productivity will decrease. With the right security, physical and mental health risk mitigation and support mechanisms in place, companies can avoid this risk. Bird says: “Preparation and a comprehensive – security and health – mitigation programme is very important… Aside from the duty of care the organisation has in looking after their staff and it being the right thing to do, it can also have a positive impact on productivity and retention.”
The Bank of England charted a 4% decrease in employee productivity as a result of the pandemic. Specific challenges regarding productivity during the pandemic were ‘difficulty concentrating’ and ‘taking longer to do a task,’ according to research by Qualtrics. Productivity, stress and crisis are closely linked.
With the situation in the Ukraine evolving, companies operating within the region – and even those with employees concerned about the crisis – may see similar productivity impacts on their workforce.
In Ukraine, several risks are intertwined. Covid-19 is obviously still a concern, but so too are physical health and safety and mental wellbeing. The various factors that affect companies have to be considered in crisis planning and scenario mapping. “To understand the environment, you’ve got to understand the risks and how these may interact with a specific organisation’s profile. We have dedicated teams all over the world that are regionally specialised. They are constantly monitoring the threat environment and informing our clients what these events mean, how they are likely to evolve, and what their organisations should be doing in response to keep their people safe and healthy,” Bird says.
Thus far, International SOS has handled numerous requests for security assistance – largely regarding people movement, which can vary from one person to a small convoy of people – and a significant amount of requests for information and analysis. The intelligence provided can help companies make more educated decisions about their operations. Information about the crisis is sourced by regional specialists – including deployed incident management teams on the ground – before being corroborated and checked to verify its accuracy and relevance. Tactical updates like this – and the analysis and advice they lead to – have informed companies about the crisis’ impact on the logistical environment along the Polish border as well as the conflict’s wider ramifications, for example.
To further support organisations affected by the Ukraine crisis, a hotline has been put into place for individuals emotionally affected by the crisis – offering support in Ukrainian and Russian. And, International SOS has helped organisations build escalation and resilience plans, to manage possible impacts on their people and operations either in the region or beyond.
“In terms of immediate crisis response, it’s both the big-picture information and the slightly more tactical; what’s happening on the ground,” Bird says. “We are doing the urgent alerting if there’s an immediately impactful event, but also taking a step back and looking further afield at what the impact of the crisis is going to be on other geographies given the interconnected nature of the global security environment.”
Risk management plans are essential to business continuity, even when crises are not occurring. However, corporate crisis planning is improving. “For those companies that have been tracking [the Ukraine crisis] quite closely and have developed their crisis and contingency plans ahead of time – and had them informed by ongoing information and analysis – were able to implement those quite quickly and then draw down their staff and adjust their operations as need be. We have been tracking this crisis and the escalation indicators over an extended period, keeping our clients informed of this. When enough of our escalation indicators were met, we advised our clients to evacuate Ukraine – and this was 12 days before the start of the current conflict” says Bird.
The challenges posed by the Ukraine crisis may have caught companies off-guard in terms of geopolitical risk preparedness, but Bird says, two years plus of pandemic-related risk management has seen companies become more flexible and adaptable.
One of the ways in which that adaptability was facilitated was by transforming the crisis management team. Instead of simply being comprised of risk managers or health and safety experts, HR teams have been brought into the fold. So too have medical professionals, leading to a more integrated crisis management function. And, the impact of Covid-19 on all aspects of operations has put risk management at the forefront of the C-suite agenda. HR, for one, has seen a 60% increase in its responsibility for crisis management.
This has led to the relevant decision-makers all being able to contribute to crisis planning more quickly and more comprehensively. International SOS’ research indicates that the speed of decision-making has increased for 70% of respondents. Moreover, 78% of HR departments say decision-making has increased in speed.
And “in this world of fast-moving complexity and interconnected geographies,” Bird says, preparedness and impartial information and analysis are key to enabling companies to better approach crisis management. “The elevation of the HR professionals as well as the integration of mental and physical health professionals, alongside security people as part of that wider crisis management decision-making process ensures that companies can and do respond as nimbly and ably as possible,” Bird says.
The challenge, now, is to prepare for the impact the Ukraine crisis will have on the future. The events in Ukraine could be drawn out over a long period of time. They could have a ripple effect across the world – even more so than is currently the case. Bird says the ongoing conflict in Ukraine is “hugely consequential event in regional and global history”. How this will affect corporate operations even beyond eastern Europe remains to be seen but is something companies should consider when approaching risk mitigation and crisis preparedness.
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